Electrical energy utilization is one of the indicators of development of a country. India targets 9 – 10% economic growth rate in a sustainable manner over next 10-15 years, for which the adequate availability of energy would be crucial. Hence, the country is fully committed to develop and expand its energy generation capacities. The development in small scale development sector has enough potential in country, which are equally beneficial as the large projects are. The consumption or demand for electricity varies with time in a day. A trough and peak may be observed in demand pattern of electricity. It is not economical to build base load power plant to satisfy the peak demand. The easier way is to increase peak hydropower production by pumping up the already flown water through turbines back to the high reservoir using cheap electricity of trough periods. By development of electrical generator which can work as motor and turbines and also as pump when rotation direction is reversed, investment cost of pump storage hydropower has decreased to half and it became economically more attractive. The net effect is to store the electricity produced during the low demand period in the form of potential energy of water, which can be used during peak demand. Pumped water storage is at present the most widely used method of peak satisfaction of electric power systems. In this paper the economic feasibility of installation of a pumped storage hydroelectric power plant is demonstrated, at MIDC area of Dhule town by taking the advantage of available water at MIDC reservoir and the Laling hills in nearby area. The preliminary survey, planning and design of pumped storage hydro electric power plant for MIDC Dhule is done along with the cost analysis.